Chanel 2015 Spring Pricing Update

Friday, April 10, 2015

The Economics of Fashion
It’s that time of the year again… large luxury brands are increasing prices by around 5-10%+ across the globe.  That’s bad news for any girl looking to purchase a new bag.  Chanel in particular is rumored to execute even more drastic changes.  Changes that may be welcomed or shunned depending on where you live.  The brand will:

1.       Sync global prices to reduce the large price gap between Europe, Asia, and the Americas
a.       Increase prices in Europe, Decrease prices in Asia
2.       Decrease Classic Bag production, including the Boy Bag

Chanel Harmonizing Global Prices:
In the past, many, myself included, flocked to Europe for handbag purchasing splurges.  Those who mastered the art of shopping all know, time and location is of the essence if you’re trying to get the best bargains. 

Retail prices are significantly lower in Europe compared to Asia and the US across all brands.  In addition to the decreased MSRP (the best perk of shopping in Europe), the VAT refund, amounting to about 5-7% provides even more incentive for foreign visitors.  Throw in the weakening Euro, and European luxury products are 20-70% more expensive in Asia/US (more so in Asia). 

Starting April 8th 2015, Chanel plans to achieve consistent brand positioning worldwide by aligning prices for the Classic Flap, 2.55, and Boy Bag across the globe.  Bruno Pavlovsky, President of fashion at Chanel plans to focus on “customers who are seduced by the brand, who are seduced by our creativity, by our know-how and our finishing, and not just the price differential.” 

Prices will increase by about 20% in Europe and decrease in Asia ie. China, Vietnam, Thailand…Looking at the classic bag for example…you’ll see over a 20% increase in Europe and a large decrease in China

2.55 Classic Flap
 €     3,500
 €         4,260
 ¥  38,200
 ¥      30,000

Boy Bag
 €     3,100
 €         3,720
 ¥  32,700
 ¥      26,000
The Results?
Chanel Classic Flaps are sold out in Europe in the last few months, and currently, Chinese are lining up to make their luxury purchases like it’s Black Friday in Asia. 

From the retailers standpoint, normalization of pricing will decrease variances in both inventory and sales between various countries as people begin shopping more in their home countries.

From a consumers standpoint, I say, NOW is the time to book that flight to Europe, SHOP, and stock up, because Chanel’s bold move will place pressure on other luxury brands to conform, and you want to get the best deals when you still can. 

What are take's on Chanel's bold move?

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